Here’s How (Most Of) America Will Get Legal Sports Betting

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Pulling a rabbit out of a hat

The history of gambling expansion in the United States is one of massive exceptions creatively and persistently crammed through available loopholes.

Some operators wanted slots but could only offer bingo. So they turned bingo into slots.

Some operators wanted casinos, but were only allowed riverboat gambling. So riverboats eventually became permanently moored structures that are essentially indistinguishable from land-based casinos.

And so on.

That same path will likely be the one much of the US takes to legal sports betting.

Step one: The spread of fantasy sports legislation

Right now a bit over 20 percent of the US population lives in a state where real-money fantasy sports contests are unambiguously legal.

In nearly all of those states, the enabling legislation for fantasy contests shared two key characteristics:

That number should climb to about 35 percent of the population before the end of 2017. That’s an addressable market of some 75 million consumers age 21 and over. That’s a market larger than Germany, France, or the United Kingdom.

While the legislative momentum for fantasy contests has definitely slowed, it would only take a couple of big state wins in 2018 to nudge the number above 50 percent.

Step two: Aggressive – but legal – products will blur the cultural and legal definition of sports betting

Legalization and regulation are already having two transformative impacts:

  1. The launch of more aggressive products. By “aggressive,” I mean products that move closer to what the average person would consider a sports bet. Regulation provides a legal shield for companies; critical cover that will let them walk right up to the line without the fear of significant legal liability. Example: The parlay-based FastPick, launching this month in partnership with land-based Atlantic City casino Resorts.
  2. The entry of betting companies into the fantasy space. Nevada bookmaker William Hill US applied for fantasy contest licenses in Mississippi and Virginia. Paddy Power Betfair just announced the acquisition of US-focused fantasy sports app Draft.

Both impacts will accelerate with time and the expansion of the market. Both will increase the conflation of sports betting and fantasy sports contests.

At some point in the near future, there will be little to differentiate sports betting from fantasy besides the ability to place a bet on the outcome of a game.

Creative minds found a way to transform bingo into a slot machine. They can no doubt find a solution to that comparatively minor challenge.

Step three: Pressure for legal sports betting will increase in the courts

As the market evolves, states will simultaneously continue to apply pressure to PASPA, the primary legal hurdle preventing them from legalizing and regulating sports betting.

New Jersey’s long-running legal challenge to PASPA is reaching the end game. And while New Jersey may ultimately come up short, the state provided the scaffolding for other states to mount their own challenges with lower effort and cost.

Six states have introduced legislation related to regulating sports betting in 2017.

Meanwhile, critical changes in the broader climate surrounding sports betting could shift the legal scales in favor of the states, including:

Even without a toppling of PASPA, the continued application of legal and legislative pressure will further contribute to an environment where regulated sports betting appears more and more an of an inevitability.

That environment will embolden lawmakers and the market, accelerating the impacts of steps one and two.